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tv   Power Lunch  CNBC  March 11, 2010 12:00pm-2:00pm EST

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welcome to "power lunch." i'm steve liesman filling in for tyler matheson. we'll have breaking news from the federal reserve on total consumer debt and total household debt as well as debt for the whole country and what that data will show is that total debt rose by just 1.6% in the fourth quarter compared to a stronger rise of 2.9% in the third quarter. inside of that household debt fell 1.2% and businesses down even more, 3.2% and a lot of this debt from corporations is
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refinancing. the total debt stock in the fourth quarter declined. now what about government? state government debt rose -- this was one of the smaller rises, but it is a sub stooub stugz sub sugz. household net work rose by 683 billion, debt fell and it has to happen, $25 billion, inside of that household mortgage debt declined by 53 billionio upon we're making progress in getting less leverage. home equity rose for the success straight quarter to 38.1%. don't get excited about that, that number used to be 50%. household real estate values declined by 38 billion. the value of equities rose though, 12.1 trillion, up by half a trillion dollars. my colleagues -- >> hello, steve, great to have you here. >> half a trillion in net extra gain in value for the fourth quarter. >> exactly.
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>> that happened. >> this is a survey that we hardly ever paid attention to and then in the financial crisis they announced for the first time in history house hole net worth had gone down. what do we learn here from the status today? it does this give us any hint into whether or not we are seeing a recovery in the economy? >> if you're alan greenspan you learn an awful lot from this because his modeling of the economy goes a lot from the value of net worth by households especially equities and especially households with equities, more so. and the idea being that there is a wealth effect. a certain amount of extra dollars in your portfolio means you will spend a few extra. there's debate about how it is, but a lot of economies are going to -- >> we're having weird audio problems. >> just the numbers, though, household debt, household 2% and this is a good thing. that's a bad thing and we want businesses -- >> and the credit markets are on the third, and federal debt up
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1.6%. >> and -- to another place and -- and we're watching it take over for the household and real quickly here, the idea that -- >> they're working on it. >> that what you have is some of that debt from the household is going away because it's being written off. some is being paid off and some is being written off. i wouldn't talk about the big debate that's out there about the shape of the recovery which works right into. most economists argue it will be lackluster recovery and a u-shaped or l and w for a double dip. nobody sees a v-shaped recovery even though i want to talk about some parts of the economy are already in a v shape. a sharp decline followed by a sharp bounceback. look at these charts right here, in the fourth quarter, business spending surged at 16% annual rate. what do you see there, dennis? >> looks like a v to me. >> they look like a new plan
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equipment and software. now both the services and manufacturing industries of the institute of supply and management. what do you see there? >> that's a v. >> does anybody see a v? >> that's a deep, deeper, and stronger. >> unfortunately, go to the next chart and you'll see a lack of a v. >> this is job growth. >> job growth always lags. >> it does lag and i don't think we have that chart. there we go. terrific. what do we see there? >> we need to zoom up on the teensy v. >> is that sort of down? whatever that is. >> and we continue to puzzle over this and some are skeptical about returning job growth and charlie, vans, chicago fed president in washington earlier this week said he thinks it may go up from here and the unemployment rate. >> let's continue the discussion. >> we have two guests. >> are you teasing me. >> stewart hoffman and cnbc's rick santelli.
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let me start with you. first of all, the parts that are a v are almost entirely unremarked by eight lot of economists there. a v, you can have small parts of the economy in a v, as you noticed business investment, but if you look at either jobs that you did or just gdp itself it looks more like a u to me. it will probably take until the end of this year to get back to where we were for gdp, to be back to where it was. i don't want to, you know, mitigate that or minimize it. a u-shaped recovery, i call it a ha half-speed recovery and you might have a couple of small vs embedded in there and the big picture is a u with spending, jobs and gdp. >> stewart, you actually think we'll see job growth this month in march, right? >> i do. it's about time, as you showed we've had some rise in gdp. i think march we'll see some job growth. >> stewart, are you know one of those guys who predicted we'd see it in january and february
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as well because we've had a let of those predictions. >> no, i didn't. the snowstorms would have had a minor effect, but to get us down to the month is, you know, being a little too clever. i think we will have job growth in march, but over the next three or four months we'll have sustained job growth. let's remember jobs went up and then down. if we get one up and down, that doesn't mean -- >> rick santelli, it seems to me suddenly the credit markets are healed. joe lavorgna today and some think that is more rises in the stock market. does it? >> you know what? i think the credit markets are moving along just terrific, just like they did in '03, '04, ' 05 and '06. i actually think it's an indicator. i wouldn't laugh. i little it's a subtle indicator things will get ugly again. i think you can hedge and wedge for so long and you can interpret for so long.
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>> explain to me how is it that corporate will get better for stages and that things will get worse? i don't get it. >> what do smart people do before the mortgages melted down? they moved into a long-term fix. who was in trouble? the adjustable rates. it's the same thing. corporate america understands. they don't want to deal with short-term funding issues and they don't want to be held hostage with another seizing up of the commercial paper market. they're extending. i didn't say it was bad. >> it is another -- in rush bonds and every piece of paper and all of the leaders of the world say it's good and they're buying it. it isn't necessarily a good thing. >> the sellers of the corporate debt are doing t maybe out of fear. we need to lock in rates because things will go to hell later. the buyers of the corporate debt are buying because they're thinking i believe you'll pay me back. no problem and they're base on fear rather than hope.
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>> i think they'll pay back, gmac and freddie and fan sxe they'll get paid back with a different person and one final thought, the trade deficit today and foreclosures is a great example of green chutes. both imports and exports are down. we're celebrating that ask you talk about the weather affecting jobless claims and employment and don't mention how it affected foreclosures. you have to pick and choose equally. >> thank you. >> it's a conspiracy. let's get to the market action, speaking of conspiracies. i don't know what kind of segway that is, but bob pisani is at the new york stock exchange. roberto, another one of these eight-point moves we've got. >> the important thing is general principle, we're grinding higher. i know it's tough to be in the narrow trading ranges on light volume, but we're still sitting at new highs and only four points from a 52-week high in the s&p 500. i got an e-mail about the inflation hawks. china's cpi was much hotter than anticipated and china will be raising interest rates fairly soon. this has put pressure some of
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the chinese stocks that trade here and a lot of the big names are down 2%, 3% or 4%. most of the guys who follow this think it's way too early to follow this. tomorrow sales, we're expecting modest improvement in february. top line is -- bottom line has been fabulous and gymboree has had numbers this morning and that's been the trend. we have new highs on most of the big names and nike's a new high and tjx, and home depot also at a new high. finally good news on the ipo front. it's been a miserable year for ipos and a lot of them have postponed and 70% have come below their initial offering and the sensors around the world and big in the automotive industry and big in the appliance industry and priced at $18. the price was 18 to 20 and both sitting right near the highs and that's good news for a very tough industry, the ipo business. dennis, back to you. >> thanks, robert. as states continue to battle the budget deficits popping up everywhere, a controversial move
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in kansas city. the board vote last night to close 26 schools. here to talk about the states of pain is mark funkhouser. thank you for being with us, sir. they're not closing half the schools in the entire city. of 200 schools they're closing 26 schools mainly in one district. i've got you right there? >> that's right. and it's not our largest district. >> how many kids total are affecting by those 26 closings and that have to go to another school? >> we have 75,000 school-aged children in kansas city. this particular district has 16,000 kids in it. at least i would say half of those or around 8,000 folks are going to be moved around and make no mistake, for the families involved this is a huge disruption. this is really a difficult situation. >> right. how much money do you save and what chunk of that is what you need to save? >> the superintendent of schools
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thinks that this move will be a significant part of a $50 million gap that he's got to close. they've been spending down reserves for some time and he's come come and basically taken the bull by the horns and said, look, we've got to turn this thing around and we have to do it sharply. >> sir, i understand that ten years ago there were 36,000 kids in this particular district and now you're saying, what? 16,000? what happened? >> what happened is 40 years of neglect of the urban corps of kansas city. at one time this district had 70,000 kids in it, but we've lost from the urban core of kansas city 100,000 folks. >> why did they leave? >> they left because of poor city services, because of fear of crime and because of the schools, and that's why i've instituted a program just started it, a comprehensive package called schools first and the whole idea is to address the issues of infrastructure and
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services and crime and safety around schools and bring people back to kansas city, particularly to the urban core. >> did you ever consider school choice, sir? did you ever consider saying to these people you guys decide. everybody gets a voucher and you pick the ones to go to and the ones that will be the ones that shut down. >> think there's a fundamental flaw in the basic idea of schools, of school choice because basically, if a kid leaves a school so that, say, $9,000 for that kid that leaves that school, the costs for the school did not drop by 9,000 and in fact, the cost, if you have 19 kids in a classroom, the costs are the same as if you had 20. so i'm not -- i'm not a big fan of vouchers. however, in kansas city, we've got charter schools and we have faith-based schools and private schools and 15 different school districts. schools first and my focus is on all those schools.
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>> mr. funkhouser can you give us an idea of how bad the budget is right now? >> the budget for the school district, as i said, he's 50 million short. >> out of how much? what's the total? >> oh, i would say 250 million, but, you know, i'm the mayor, and i run the city government. he's the superintendent and he deals with the schools. >> he says that he'll be bankrupt. that the district would be bankrupt in a year, year and a half if they don't do this. >> who are the bigger opponents? >> is it the unions or is it the parents of the kids? >> it is a cross section of parents and teachers who believe that their particular school is vital and are concerned and some of the schools that have to be closed are relatively successful schools. there's a program here called ace, african-centered education that has showed enormous gains. he's taken three different schools in the ace program and consolidated them into one. that's really painful and the
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split on the board has been on racial lines. now i'm going to talk to the board president with whom i have a good relationship with and the superintendent ask work some of this out them and see where they are with this. they're both african-american. >> thank you very much, we appreciate you being with us. >> sure. thank you. we continue to look at the debt threat. next hour, is a la cart government the way to go? we visit one jersey town where sharing services is keeping taxes down and we're going debate whether privatizing your public assets is the right fix for budget shortfalls. but still to come -- >> markets surging one year after we hit bottom upon are financials really fuelling this rally? we'll check in with our market insider. plus pg&e's ceo, we'll talk dollars and cents on the future of energy and the new shoe out from reebok. will it be making its way into your closset? all that plus "the fast money halftime report," "power lunch" will be back in a minute.
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welcome back to "power lunch." i'm john harwood in washington. we've got developments on financial regulation reform. as you know, chris dodd, chairman of the banking committee and corker of tennessee have been in talks for some weeks now on a potential bipartisan bill, but that is now
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not going to happen, at least at this point because senator corker came out and had a news conference today and said another issue had gotten in the way. >> i began the day feeling like we're on the 5 yard line as far as finishing something that we began on february the 10th and never did i realize that health care would affect financial regulation. i knew that obviously tensions would exist, but i didn't realize it would affect the calendar the way that it did. >> so bob corker is blaming the health care drive by the democrats on the failure of these talks. democrats have a different story. they say corker is getting pressure from his leadership and didn't have the independent tones cut a deal, and in any case, dodd will lay out a bill that he will pass on the week of march 22nd which would resolve the too big to fail problem with the wind down mechanism. it would have increased
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transparency for derivatives. it would talk about how to have the fed supervise banks with more than $100 billion in assets and that the consumer protection agency would be housed in the fed. the question of the rule-making authority and the democrats want that to be independent. we'll see if they can pass it in committee which is likely and to get it to the floor for which they'll need at least one republican vote, guys? thanks for the update, john harwood live from washington. maybe the compromise kaput? so it seems. what about a dems-only bill this year? will it derail the vrally we've seen in financials. dave snead of snead capital management and rich, from capital partners ceos. bill, how closely are you following the legislation in washington as to how it will affect financials? are you worried about it? are you buying them or not buying them, depending on it? >> carl ryker, the former ceo of wells fargo told warren buffett one time, he said i don't know
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why bankers come up with new ways to lose money, the old ones work just fine. in a way, these bills are designed to get people back to the old ways of making mistakes rather than the new ways of making mistakes. so the reality is this, too, shall pass, as the economy improves over the next couple of years, and we ultimately get past the housing debacle and then what happens is the loan losses begin to fall off the income statements. >> and the yield curve is super steep, right, rich berg? >> yep. >> right now the operating income of financials will be terrific. the question will be writedowns. it looks like the big banks have written down a lot of their assets. we're not sure about the next section of banks and i would say banks make money from three ways and they take risk on credit and they take risk on liquidity and interest rates. right now they're taking a lot of interest rate risk. they're borrowing at near zero and plowing a lot of money into government bonds, mortgage bonds
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and municipal bonds and they're reporting big earnings right now. >> why is it a big risk if i'm a bank and borrowing near zero. what's my big risk if i'm borrowing near zero. >> if you can guarantee i'm borrowing the maturity of my investments and the loans at zero, it's not a problem. does anybody want to make that point in the interest rate cycle? that's the risk. they're borrowing 4%, 5% or 6% down the road. will you tell me what the regulatory risk is here? if they come along in congress. we understand there will be higher capital and the banks are operating. you can't do certain businesses and they can sell those businesses and get value for it. so where is the regulatory risk in this dodd bill that's coming out monday? >> the thing that we always like to bet on when it comes to the financial services companies and pretty much everything in the united states of america is adaptability. this is a software program that has four or five different choices. if you stop us from making great spreads one place, we'll move to
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where the great spreads are. also the reason they're holding the treasurys right now is people don't want to borrow the money. people aren't buying houses and cars at the rate they normally do. we get out a couple of years and people will get out to buying houses and cars and in the meantime they're helping their own household p&ls get stronger and so all of this is just a time process. the thing i would like to add, though -- >> i'm looking at the bank index, bill and the market is not selling off here. these stocks because of regulatory reform. is that the right call here? >> the regulatory reform, in my opinion is not going to affect the future outcome of the value of these stocks. >> okay. >> it will be how well they run their business. >> we're still early in that recovery cycle for the financial stocks. >> all righty, guys. >> thank you. >> coming up next the power lunch exclusive. we'll go live to houston and talk to a real power player, the ceo of pg&e. >> the stock hitting a new 52-week high and the meltdown since the fall of '08.
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union pacific, metlife, fifth third and lexmark, three out of four still in the green.
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>> maybe it's not. these are the most actives at the new york stock exchange. citigroup as is often, higher by more than 2%. we'll talk about that stock later. bank of america, sensata, synovus and pfizer at the top of the list. skillsoft, powershares, qqq, intel, and cisco systems. they're gathering in houston as they explore strategies for a rebound in energy demand. cnbc's sharon epperson is at the event and joins us with a special guest. sharon? >> thank you, steve. pg&e is one of the largest combined natural gas and electric utilities in the country serving more than 15 million customers in northern california. i am joined by ceo peter darbee. >> thank you. >> what are we seeing with
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energy demand? are we starting to see a rebound yet? >> we haven't seen it yet in california. energy demand came off a year ago and it's been relatively flat and we're not seeing more demand just yet. >> so when do you expect it to pick up, particularly industrial demand? >> what we are seeing is large industrial companies are filling the pipeline now in terms of more products and delivering them to their distribution channel and as that continues, they're going start to hire more people and at that point we're really going to see demand pick up. >> quickly, natural gas, that has been a very big topic here in this conference and particularly looking at unconventional gas and how does that factor into your business? >> it's a major component in california, particularly because we use a lot of naturally gas-fired gas and with gas prices coming down that's helpful to our customers and keeps the bills that they're receiving flat. >> okay, steve? i want to pick up where sharon left off. everybody is very excited about all of this natural gas we found
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in pennsylvania. are you guys thinking about building the utilities that will power our use of the grid for automobiles and get rid of the fossil fuels we're importing now. >> well, we're using a fair amount of natural gas, but at the same time our state has made the policy decision to go to first 20% renewable power in 2010 and then 33% renewable power in 2020. so we're going to have a mix of cleaner fossil generation and natural gasses, the fuel source there together with renewables moving forward and we back that up with both hydro as well as nuclear. >> those are the mandates, but is that a realistic goal? do you think you'll get to that percentage in 2020. >> we for good shape in being in compliance with the 2010 requirements and we believe we have time, if the policymakers and we work together collaboratively to get to the
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33%. it's a long time off, but we're making progress each year. >> at the same time on. >> is that the choice you would have made or would you be more into natural gas if not for the government mandates? >> well, we as a company have looked at the question of climate change and concluded that it is happening and action needs to be taken. so we're moving aggressively and not only contracting for renewable power and also investing in it. i think we would have done substantially the same over time if the policymakers and regulators supported us in that direction. >> peter darbee from pg&e joining us here. next up in the next hour of "power lunch," we'll be talking to the ceo of southern company. back to you. >> looking forward to it. >> straight ahead, we go off the charts. we have a stock that's up 125% in one year. it might be a perfect fit for your portfolio. stick around for the name. >> you know what's coming in in 15 minutes, 12:45 eastern time, get ready for "the fast money
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halftime report. we'll talk about why china might be a good thing for those commodity stocks and what the unusual activity in game stop option will tell you what the stock will do. first, more "power lunch" right after this.
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welcome back. we are almost half way through the trading day. in the headlines at had hour. dr pepper, snapple, visa and meadjohnson hitting all-time highs today. at a conference in florida, cftc's gary gensler chastised wall street for resisting reforms at making over the counter derivatives market more transparent. and a legal victory for pink floyd. britain's high court ordering record label em ito stop selling down lows of the band's tracks individually rather than in album form. it's an artist thing, dennis. they go together. >> we made an album, man, you can only buy it that way. they didn't release it on a 4530 years ago. now to a stock that has been off the charts and hitting a fresh 52-week high today. urban outfitters, the retailer, more than doubling over the past year and adding 16% in just the past month. here to break it down, laura
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champine. laura, you're kind of tough. this stock is up 126% or so in the past year and you had a neutral the entire time. what does this stock have to do to get your buy recommendation. >> usually on urban outfitters, a great company, but we wait for them to make a fashion mistake, if it starts to trade a day in line with the group and that's the day you want to buy urban outfitters and we've had success with that strategy. the thing about urban it's in the group that's on fire. the whole group is up 120% over the same period. its performance has been phenomenal, but you could have thrown a dart at this point last year. >> how much pricier is it to other retail stocks? i think you have them at roughly 20 times your projected 2010 earnings. what is the retail group trading at? >> this morning the stock is at about 22 times. the closest peer traded at 17 times and that's a five multiple biz disparity.
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and the path from 22 time to 25 to to 30 is just not as clear. over the long term they expect 20% growth. if i were another retailer shouldn't i just buy them? why doesn't gap buy them or limited buy them because you're ensuring a 20% growth if they can do it. >> you know, you make a good point. and i'm not sure you're ensured 20% growth, but what they do have is a whole lot of cash on the balance sheet it's not doing much with. i think that's the problem for this company. it's a great problem and a problem for a lot of the group. a lot of cash sitting around on balance sheets and businesses that are just getting more profitable. >> nice job, laura, thanks a lot. i know you do want to recommend a buy and you can't because it's gone up so much. have a good day. coming up next, toning shoes, you get better just by walking around in them turned into a $1 billion business almost instantly because you know how women are, they love this stuff. we'll tell you why these shoes and another one that's debuting today could have reebok on the rebound. >> and in a little while, a bra that does the same thing.
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no. game on, the video game business is struggling. it's got new titles coming up, new technology. will that be enough to fire up the sector? we are going to go life to the big game developer's conference and find out. "power lunch" will be back in two minutes.
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in 2005, reebok was bought
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by adidas for $3.8 billion. the alliance didn't necessarily help reebok, though. the brand lost market share, but reebok is back to being the talk of the sneaker world thanks to two new products and darren rovell is here with a special guest. >> michelle t started for reebok going back for shoes for women. the easy tones helped build a toning category, a second shoe called the zig tech hitting stores today and joining us is jim gable president of reebok north america. thanks for being here. >> my pleasure. >> this shoe, this easy tone shoe. >> yes. >> $300 million business in toning in 2009. $1 billion in 2010 and you can't keep up with demand. >> no. since the middle of november we haven't been able to keep up with demand. so we've put more lines out in the factories. we're trying to keep up with it, but as fast as we're getting them in, we're airfreighting them in on a daily basis.
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>> it's difficult for viewers to see as we hold it up, all of my girlfriends have these and there's stuff in there, right? so when you walk -- >> yes. it does something to your -- >> there's an air pod connected from the heel to the fore foot and what that does do is it creates instability in the shoe so when you and your friends walk it tones leg muscles and your buttocks and that is what's inspired people to get out and walk more because they're getting a workout. >> these zig tech shoes, it's hard, with so many shoes coming out. >> these are out today. >> $100. i've been told that the folks at dick's finnish line, all of the people bought more than they thought they would. it looks different, what does it do? >> exact opposite of toning. the idea with toning to work your leg millses per so the zig tech is allowing you to go locker without injuring your muscles. when you're running, shin splints is one of the key problems this redice the wear and tear on your shins by 20%.
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it's three years in the making. >> the heal, it looks like teeth from a shark or something, that's the idea? >> it's almost like a slinky. so if you think of the slinky transferring energy from one side of the other, when you have a heel strike on the shoe and as you're going through the fore foot, energy is transferring through so the muscles don't work as hard. >> maybe it wasn't you, but a couple of athletes working out in the zig techs naked online. >> nation sned. >> yes. do you have any comment on that? >> certainly, when we designed them we thought people would be wearing clothes. i guess the good news is that they work equally as well whether you have clothes on or not, so -- >> that's being -- you'll find it online. chad ochocinco and chuck liddell are working out. >> oh, my! >> one more on the toning shoes. how do you protect yourself? sketchers is in the marketplace and they're in more doors than you are. we heard payless is selling a champion shoe, how do you lead
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in this market. >> they have more market share than you do. >> we've come out with a running version for people that run. we'll come out with a version specifically for the gim and in the fall we'll come out with a version for basketball. innovation will drive this category and we've been an innovator in the decades and we have been able to lead. >> the reebok name is back. >> still ahead, in the 100 hour, carlos slim, number one on the forbes billionaire lift. capitalist hero or a corporate villain who exploits the poor? we'll debate. the comeback kid, people were talking on tim geithner and vikram pannedity to resign. how do they pull up this reputation rehab? that's on "power lunch" at the top of the hur and up next, melissa and the gang with the fast money halftime report. with fidelity, you can take your trading around the world,
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because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, al same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.
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welcome to "the fast money halftime report," on the move right now, financials, racking up gains and after a ten-day win streak how long do you keep them on. the fast money crew, guy adami, jon najarian of option monster.com, and jack caravel
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and patty edwards from storehouse partners. we have news crossing from citigroup. vikram pandit, the ceo is addressing investors in a presentation. some of the headlines is is citi's goal is to have a 1.5% return on assets in the core businesses and the stock is firmly above 4 bucks a share right now. guy adami, are you getting more positive on the citi story? >> hi, mel. >> hey. >> i own it, so i have to be a little bit positive. i'm not -- i'm not doing backhand springs and goldman sachs which appears to be broken out and has a plan. i'm sure citi has a plan, but i'm not yet. >> they're laying out a plan and if vikram pandit -- we're monitoring the situation and we'll bring you the news as it crosses, citi will earn $20 billion by 2012.
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dr. j, that's a pretty good number even ahead of the lock up period expiration. >> the reaction out of the stock like guy all likes to say, about thor reaction and the lockup period is upon us and yet the stock continues to climb. i see institutions buying, buying, buying on the options side. the biggest option block today, 48,000 calls bought in one block so there's a lot of institutional action in citi today. that's been active for the last two weeks and it obviously, they've been richly rewarded. this thing gets through five, and i think it's katie, bar the door. >> zack caravel, once it crosses $5, and it's inching closer that it will open the door for institutions and we will see that flood buying in the market. if that's the case, get in at 410, right? first of all, who's katie and which door? secondly, a week ago, i thought citi could go up 20% and now i'm thinking if you can go up another 20%.
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this is the low quality financial rally of what we used to see in low-quality tech rallies, but the problem is they can go on a really long time and people are piling in because there's not a lot of other action in the market. i don't particularly like citi, sxooif said that, but i do like it at these levels and this trade. >> let's make it clear ask we can talk about the long-term fundamentals for the stock and it could make a difference for the stock as a trade. patty ed wars, is this a trade at $4.10 or so? >> it is a trade, but i'm a sentimental girl and i'm kind of with zach, i don't like it. >> you want to be in it, but you don't want to be in it. >> exactly. >> on this one i actually do want to be in it and i don't like it, so -- >> just to answer the question, just so we have it, it's from a james riley poem -- >> oh! >> i believe it was 1894. >> there you have it. >> that's impressive. >> i think guy was googling as we were having that discussion. >> how i can be googling if i'm
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on with you. >> anyway! investors fearing the chinese government will distinguish the hot inflation numbers. dennis thinks they've got this one wrong. he's on the fast line. higher inflation means higher prices and that's theoretically good. >> i did find it rather comical yesterday, mel, when the whole world is selling commodities off because higher inflation in china. i'm thinking, wait a minute. doesn't higher inflation give way to larger, taller, stronger commodity prices in general? and the answer is yes. sometimes markets look for very strange reasons to do -- to have corrections and all you were seeing in many of the commodity markets and specifically in gold was a correction, a consolidation, but they had to find some reason to account for it, so let's say that the chinese arie going to tighten. what's going on is a strong chinese economy and they have to tighten monetary policy to slow things up and is that detrimental to the commodity markets. from here in virginia, i have to
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raise my hand and say i think you all have this one wrong. >> say they do tighten and interest rates go higher barring costs for chinese companies, things that may construct things, dennis, go higher that will not derail and dance in the demand for the commodities and therefore have an impact on prices? >> not at all. go back and look at the strength of the u.s. economy in the 1980s. interest rates were going up in periods of time and the economy continued to get stronger. in fact, the best markets, the strongest commodity markets and even the strockest stock markets occur not when rates are falling, but when rates are rising because that's an indication that demand that the demand exists so there are times to be careful about rising interest rates and worried about slowing growth. at this point, however, you have to understand rising interest rates mean stronger growth. >> yeah, weigh in on this. >> this was also inflation in china based on 6% rising food costs. >> food costs. >> some producer price costs ie the commodity side and to reason for chinese government to
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tighten based on the reasons for then inflation which is a way to transfer income from the hot urban areas to the less hot rural area sos the same thing a couple of years ago. >> good point. all of the increase in the inflation number was food related. that's not something that i get too terribly concerned about. >> exactly. >> thank you for phoning in. we always appreciate it. nice to speak with you. >> thank you. you're welcome. >> guy, these are names that we have been all the watching. goldman sachs expressing concern. which one do you like the best? >> i would stay away from the refinerie refineries. joe i think has gone positive. he may be spot on but i'll go back to transocean and announcing the quarter, it was disastrous and flushed out the weak longs and looked at an opportunity to get in now. we saw trade up north of 86 yesterday. now looking for levels to take profits. i think rig probably trades down to 83, 84.
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that's where i'd get back in. >> raising targets and but some concerns about sunoco. moving on to the auction. moments away. patty edwards, how are you setting up? is this an area of the market you like, the long, long end of the yield curve? >> absolutely not. we have been taking our individual clients and moving them to the short end of the yield curve. at this point, we would much rather be in the short end. we'll buying dividend-paying stocks. i don't want to be playing with the bonds until i'm sure that rates peaked. >> you are doing what many other investors doing and piling into the shorter end of the yield curve. look at the chart of the day. that yield curve getting a little bit steeper. the spread approaching a record here. dr. j, you think it is one of the most crowded trades on the street throughout? >> absolutely. for good reason. nobody wants to tie up money they think is more dear and thus
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earn them a higher rate going forward so they're in the short term paper. it is getting crowded but i think it gets more crowded until wefinally see the moves later this year. 30-year bonds and 10-year bonds, pinco showing straddles and strangles out there. that's out past july. i don't think they're going anywhere either. >> interesting color there, dr. j. after the bell today, watching mall stocks. they're reporting earnings. patty, store has partners, got a good view on this. you like aeropostale, don't you? >> i do. they're the teen retailer of choice far lot of teens because they don't have as much money to spend anymore. the upper end folks are not giving the money to the kids. seeing the numbers in ab
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abercrombie going into this. >> we saw j. crew. >> look at you, melissa lee, yes. yes. j. crew crushed. look at the epf and said going forward. that stock was on a tear until they reported a great quarter and then they crushed that. so it's very interesting a great quarter doesn't mean a great stock performance. i like j. crew. i'm sort of scratching my head as to why people don't like it but maybe too far too fast. >> i want to get to a retailer in the bottom 20 of performing s&p 500 companies and that's game stop a. name we talk on s disparagi disparagingly. >> same thing with barnes and noble and berkeley wants to buy, buy, buy that stock. berkle, rather. unusual activity. first 15 minutes and first 45
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minutes traded over 40,000 options already today. that's way more than normal. rumors around it, of course, about takeover. it's very cheap on a relative basis. i don't like the company but doi like the action. full disclosure on long stock and option. >> guy, you have been the one speaking of game stop in particular. >> yeah. >> you don't want to trade in the games with the kids? i'm told, i don't go but that's a reason they exist to trade your games in. you can't do that in online. >> mel, this little psa we like to do on "fast money," don't bring your kids to a game stop. bring them to a library or football field or track. let them run around a little bit. game stop, kids have the strongest thumb tons planet but all they can do and in terms of game stop, i'll say this. whether we talk about it in the next day the cfo resigned. never a good sign. i don't know where they -- >> walmart. >> guy is short game stop and
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long parenting. >> here's what's coming up on "fast at five." getting too hot to handle? with inflation jumping and rate hikes on the horizon, benefit of beijing's buying. fat money off of a slim titan as mexico's mega billionaire is the world's wealthiest man. we'll show you how to follow in his trail of riches at 5:00 p.m. on cnbc. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.
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abbreviated call to close today. guy, we go to you for it. >> s&p getting a nose bleed up here. i think it sells off. >> that does it for us. see you all at "fast" at 5:00. dennis, over to you. the world's new richest man, carlos slim. the real hero of capitalism or a
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different factor in his success? that plus a whole lot more. give a listen. states of pain. >> i think it's time to put keeping it off tough choices on spend rg gone. >> should a choice include privatizing the trash pickup, sewer and power? the comeback kid. geithner scolded by congressionals and now on a reputation rehab. now seeing a 160% surge in the bank's stock. are there personal rebounds for real? plus, the assault on salt. a bill introduced today calls restaurants to halt all salt use in the cooking. government gone wild or chefs hold off on that bam second savory and salty hour starts right now of "power lunch." >> we have been talking about that salt story all morning.
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welcome to the second hour. the fed reporting household net worth up for the third straight quarter. >> i'm steve. how would you feel about the public works being run by a private company? may th may be coming soon to a town near you. bertha combs has more. >> reporter: hey, steve. you know, small business whs they get into trouble they have to downsize, maybe sell off some assets or consider putting the whole company up for sale and merging with a bigger firm. with new jersey $11 billion in the red, many of its 566 municipalities, a lot of small towns facing similarly tough choices right now a. lot of them cut back services. some of them considering privatization. there's a study of privatizing the prison there.
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to try to save $5 million to $10 million a year. the reason foundation say it is fiscal crisis prompting more states and local communities to explore the private, public partnerships. >> local governments tend to save on average between 5% to 20% through privatization. but that's not only benefit. you get the benefit of tapping private sector expertise and talent that you may not have in-house. >> reporter: but the governor of new jersey and others say the problem here is that these small towns need consolidation, area woodbridge township consists of ten smaller towns able to share resources and streamline services and costs. >> if you were in business you would never have 566 offices around the state doing 80% of exactly the same services. and so, right there, the model falls apart. what you need to do is make them come under one entity, five or ten towns and so then they will
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have a tax base that can support this municipal structure. >> reporter: a lot of small towns are resisting that but with this fiscal crisis that debate is heating up. back to you guys. >> thanks very much, bertha. dennis? some towns in new jersey sharing vfservices and others looking to sell off public assets. how about $1.1 trillion the reason? that's the gap between what governments are likely to spend on infrastructure and what is needed over just the next five years according to the american society of civil engineers. $1.1 trillion. is privatization the right fix? we have a senior analyst on tax and budget issues. chris edwards is the kato institute director of tax policy studies. we know where you come out on this. so let's just cut to it. let's let the kato gentleman go first. >> absolutely.
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privatization of state and local services is a wave of the future, it's been happening in this country and other countries. many major countries, cities around the world have privatized the airports, for example. we got privatized highways in virginia, california, texas and other places now. states are strapped for cash. let's get the private sector to raise the money to build this sort of infrastructure. >> chris, is -- >> everyone's a winner. >> chris sr, is the privatizati -- >> i'm sorry. f finius. >> thank you for having me here. people do desperate things in desperate circumstances but talking about raising money, this is one area where we can all agree this is an area the public does it cheaper than the sector. we can subcontract but having the private sector full scale
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raise money and run these things is another question. when the private sector raises money at higher rates that means they have to charge higher rates to consumers -- >> but the private guy coming in do to do than cheaper? why is there a waste management, inc. if it's done best by the locale? >> may be circumstances where garbage is an example it can be done for certain towns where it's better but tend to be driven by short-term gain to get out of short-term budget gaps and short-term budget gimmick that way. >> i've seen this more of being able to offload risk and if you're running a town, you know that you can have the private sector do it. you get into a contract with them and doesn't matter how much snow falls. your line item on the budget is xaktsly the same and more about certain any budgeting whether or not it's necessarily a savings in cost. have i got that wrong?
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chris? >> city hires private garbage collection company, they can fire the private company and that's great but there's a difference between contracting it out and full privatization. full privatization is the way to go and in northern virginia, a private company built the greenway, a 15-mile highway in northern virginia. it was fully privately financed back in 1995. it's been running for 15 years. the highway costs investors $350 million. and it's been a great success. so taxpayers face no risk. it eases congestion and everyone is a winner. >> okay. last word here. a quick question for you. overall, wouldn't even you agree that a privately paid job is better than a government taxpayer funded job? so why not push more stuff into private services? >> what turns out in the long term the deals look a lot less good than they do in the short term and why yesterday indianapolis ended the water
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privatization. >> all right. thanks very much, gentlemen. >> i don't know if we you this. i just got an e nail do-mail do going to discuss -- >> in charge of fin reg. >> having just given up -- >> yeah. >> going with the -- >> that's actually just me talking with the guys in the back. we'll continue the coverage of the states facing financial challenges and coming up, scott cohen reporting from miami where a budget crisis may have the city in hot water with the feds. special reports all day long. the debt threat, states of pain here on cnbc. weigh in with budget cuts impacting everyone. tell us the most outrageous tax idea proposed in your state or town. e-mail us your opinion at cn cnbc.com. the road to exports goes through president obama.
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>> as we compete in the global marketplace, we've got to look out for our workers. but to look out for our workers we've got to be able to compete in the global marketplace. it's never been as important an opportunity for america as it is right now. >> how exactly will we achieve this goal especially when chinese exports are soaring and france's mad about being shut out of the air tanker contract? joining us first is ron kirk. ambassador kirk, thank you for joining us. could you lay out for us the main dimensions of the plan here for the president? >> steve, we are going to do a number of thingings and most importantly play to america's strengss, that's the competition, innovative spirit and then more smartly,out liz and focus all of our initiatives at the federal level. and so the president announced a number of things today. one is that he's going to create
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and export cabinet comprising u.s. tr, secretary of commerce, treasury and others and we'll look at how we can utilize all of our resources to help our exporters gain markets to new accesses. new markets knowing that if we sell more that will help us manufacture more and create jobs here at home. >> ambassador kirk, i understand a large part is an increase in the subsidy given from the expart/import bank to exporters. why would the government subsidize orrer artificially subsidy them. >> they don't subsidize those exporters but what they do is help exporters work with their customers around the world to make sure they have a financing mechanism for that. we know one of the real challenges of this financial recovery is getting the banks to start lending again. >> so you don't think that loan guarantees are a subsidy?
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>> not way that i believe we have got them. >> when they look at fannie and freddie it's considered a subsidy. >> doing the program makes sense that if we want to make sure that those are willing to risk capital come up with new ideas, find markets for them, i think it only makes sense as a government to make sure they have the business, the ability to finance their business growth whether through the sba or otherwise and they have a way to finance that sale abroad through the export/import bank. >> the president's comments sounded great today but looking elsewhere in other policies they threatened to kill the colombia trade deal. they've been tangling with the chinese. they did that chinese cheap tire thing to benefit the steel union. do you think countries elsewhere in the world believe the remarks about free trade? >> when they say they, steve, be honest. this government hadn't killed any of the free trade agreements. >> threatening to kill colombia,
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has he not, sir? >> absolutely not. >> derail nafta and renegotiate and said that on the come pain trail. >> if you would allow me to speak just a little bit. >> sorry about that. >> i can emphatically tell you the president charged our office to work with partners in panama and colombia and korea to see if we can address the concern that were inherent in those agreements before we came in office to have a way to move forward and the president reiterated his support for those agreements in a state of the union address. he did it in a speech to the business roundtable last week and did so again today. >> ambassador kirk, i just recently heard the former assistant treasury secretary for international affairs under president bush say he was concerned about a change in the tenor of our relationship with china. and he thought perhaps we were headed back the other way into a less constructive relationship. how do you respond to that? >> i think not. in fact, we will be traveling to
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china later this spring with secretary clinton and secretary geithner to participate in a dialogue through a structured, thoughtful process. on the other hand, in the fall, secretary lock and i will host the chinese. our relationship with china is a complex but a very successful one. this is a country that is transitioning from a dynasty-old system of a state-run economy to a more market-based economy and that isn't going do happen overnight pch but it is important that we regularly engage with our partners in china on how we can address some of these areas and don't move forward in a more thoughtful, progressive manner. >> ambassador kirk, thank you very much for joining us. >> thank you all. >> why -- so if a company can't get a loan or the financing to sell something to china, why should the u.s. government do it instead? >> i will tell you, other countries are out there guaranteeing exports. >> that doesn't make it right. didn't your mother tell you if
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everybody else jumps off a bridge, you will do that? >> on a hot day, yeah. >> if your friends jump off a bridge -- all right. up next, another exclusive, guys. a real power player. live to houston talking to the ceo of $26 billion southern company. four stocks not only hitting 52-week highs this morning but all-time highs.
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we auctioned off 13 billion third-year notes and i'll tell you, this was a barn burner of a market-moving auction. we're going to change the grading system a bit and i'll tell you why. the yield on this at 4.679 is just stock full of demand considering the wi at one point was trading 471. if you look at the indirect bids at 24%, they were down a bit. but if you look at the bid to cover at 289, it was strong. but get this. direct bidders close to 30%. almost a third of the auction to direct bidder sos in terms of
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demand you have to give ate a-plus plus plus but in terms of composition, meaning who's buying the auction, i have to give it a c-my nous d-plus because somebody taking down the 30% of the auction, i want to know who makes it up if they disappear. these things flew off the shelves. back to you. >> the yield is the grade. not. anyway. >> going to matt. >> steve, you can grade it if you want. i'll keep my grade. thank you. >> matt nesto, take it away. >> here's a news flash. 82 is new 80 with crude. been a pretty tight and narrow trading range for most of the session. tried to do 83 yesterday. failed to get higher here this morning and every time we rally down, there's a new one for you, as well. every time we sell off a bit and goat 81, there's a bid back in the marketplace and settled into a kind of trading.
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flat trading range just at about 82 a barrel. natural gas, the data did nothing to stamp the recent slide on that and continuing to hover around 4.45. about 2.5% off. copper interesting had a big rally when the headlines on the santiago earthquake crossed but both the government and anglo american saying the mining operations in terms of copper unaffected. little change on the session. gold found support at 1,100 and been back to the high of the day at 1109. back to you. >> southern company up. sharon, go ahead. >> well, david rat cliff, the ceo of southern company does have about 4 million customers in the southeast and there are a lot of questions about what is going on with this nuclear power
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plant that you have gotten a loan guarantee for. of course, last month, the obama administration giving you $8 billion to build the first nuclear plant we have seen in about 30 years and you still need more, you said. >> what we said is the industry needs more support and the obama administration is clear to try toex pand the loan guarantee program. for us, as you said, we got a guarantee for a loan from the government. we didn't get $8 billion. we got a loan guarantee which means i have to raise the money. they simply are standing behind the loan. >> how difficult is it to raise money right now is. >> i think it's a mixed bag. we enjoy a position of strength and a very good business model in your service territory and our region. so it's easier for us to access the capital markets than for other people. >> one of the thing that is we have been talking about here is, of course, what's happening to demand right now. are we starting to see a rebound. are you starting to see a
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rebound? >> we're optimistic. we fell off 6% last year in total sales driven primarily by industrial. we saw that flatten and we think we are poised to see that come back up and projecting 1.5% to 2% sales growth this year and seeing positive signs about that. like the industrial and residential will be up and commercial probably flat. >> okay. michelle is here in studio. so i was just giving ambassador kirk a hard time of why taxpayer money toub used for loan guarantees for businesses. why do you need a loan guarantee from the government? why isn't private capital stepping up to back loans to do that project? >> michelle, i think private capital would have clearly stepped up and we were well under way with the project because of the regulatory approvals in the state of georgia for this project. remember, we had gone through a certification process, state process and legislature agreed to build this plant in the state of georgia. what happened when the loan
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guarantees became available, because they lower the cost of the project to my customers, i felt like i should access the loan guarantee to lower the cost and benefit my customers. not my shareholders, customers. >> got it. the government changing the rules is driving some of that? >> not at all really. it is part of their program to pra fa sill tate new technologies and new nuclear technology. >> there's talk of the climate change bill and where do you think we stand? will we get one by november election? >> i think it's going to be very difficult to do. we said many times this is extraordinarily complex legislation. you have health care teed up. you created a lot of adversarial situations with health care. climate change is equally complex. >> thank you very much. ceo rat cliff here in houston. back to you. >> quick programming note, we will have the exxonmobil ceo at
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4:40 eastern time. we are going to chris dodd holding a hearing. >> we need to move along. and so, i intend on monday as i mentioned to put out a proposal, put it on the table and that's real think next step. i have been promising that to many of you in the room. and each week we let it slip a little bit thinking we could get further along in developing a consensus product seen the committee print or proposal to offer on monday does reflect a lot of the ideas that bob corker and others brought to the table. but clearly, we need to move along. what i'm facing mostly is what i call the 101st senator. and that is the clock. in particularly in an election year and that 101st senator, that clock, becomes a rather demanding member because as time moves on, you just limit the possibility of getting something done, particularly a bill of this magnitude and this
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complexity. and so if i don't put a proposal out i want to try to get at least through the committee if we can before the easter passover break, we'll come back almost to the middle of april at that point and so we have a limited amount of time in april. we all have the break in may, the break in july, the break in august and obviously an election year and so the time is shrinking to get this done. and so, the idea of putting this proposal on the table is not a reflection of something breaking down. the process is moving along very, very well but i thought it was important to put a proposal on the table short of a proposal to reflect some broad bipartisan agreement that the point. i'm grateful to bob corker. the major parts of this bills we're working on are four. there's a lot to the bill but we intend to stop forever the institution, financial institution in the country is too big to fail. that's going to end in this bill. we have reached broad consensus on that and my thanks to mark
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warner and bob corker that moved on that in particular. never again sthould taxpayer be exposed to the tune they were because institutions became too big to fail. secondly, we want early warning system, a systemic risk to pick up the drifts when they occur by institutions or products that put our financial system at risk. that already we have a lot of consensus around that idea. it is not complete. obviously, additional thoughts are coming the table. thirdly, we want knob a situation dealing with the derivatives, exotic instruments. working very close and not there yet but getting it and how we can provide that trance parns sy, accountability as a major source of the factor that is contribute to the economic difficulties in the country. and clearly, consumer. how do we better protect your consumers including possibility of a strong agency to engage in the kind of protections that consumers need.
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we are not there on that either but we're getting there and all of this further advanced bay proposal on the table. otherwise it is a lot of conversations that go on but i think both members as well as others who have a strong interest in this on monday will have a chance to look at a document and react to it and my goal is a week after that or so to begin a mark-up of the bill, utilizing the week between the proposals down to continue the conversations we have been having to bring ideas to the table with a goal i have in mind of coming out of committee with a consensus bill to the extent i can and then coming the floor of the senate. again, i wanted to express one my sense of optimism about. this i know there's tendency to look at the statements and wonder if there's been a retreat. there's not been in my view. to thank again all members of the committee. i have had tremendous support in the committee over the last number of weeks on this issue. and to particularly recognize and i -- as bob corker because he has stepped up and did come and say and trying to work
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together to what he described, getting "yes" on a bill and been so valuable in this process. with that let me stop and address any questions you may have. i'm sorry? >> how do you plan to get the consumer piece -- >> well, we are working at it. we have members and talking but obviously that's a major issue, working on it. a lot of progress has been made on it. i think trying to find a proposal here to enjoy broad support. i don't expect necessarily universal support. we are getting there. >> corker laid out what he thought -- [ inaudible ] >> there's a lot -- well, we'll see. again, if i -- i'm not going do say as i said to you put it on the table today but look at what's out there on on monday and see 13 titles to the bill and it's going to be a very different proposal than the one i proposed in october or november -- looking to staff to
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remind me what month it was. november. change from that proposal. obviously. but i won't negotiate here in your presence and i think you understand that. >> also said that -- travesty -- >> it would be a travesty to have -- [ inaudible ] >> well, it may, look. again, i think i have -- because all of you want me to give you time schedules and i have tried to do that and by doing so i'm creating my own set of problems for myself with dates and times so all of this is subject -- more interested in getting this right than getting it at a certain date but obviously i need to set marks in order to try to drive the process. i've been involved in mark-ups of bills over 30 years in this institution. i've learned a lot from the democratic and republican leaders and chairmen over the years and one thing's fairly consistent, you need set products, proposals on the table to get people to retookt them and then set times trying to go
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forward. obviously, that can slip based on where we are. getting this right is more important to methane getting a date but i emphasize, again, i don't have a lot of time left in this congress. i think all of us in this room and around the years know how it can go by very quickly. look how long it takes a nomination on the floor of the senate to go through. sometimes days for the procedural motions far vote and hoping to avoid that with a consensus. yes? [ inaudible ] the administration cares deeply about this bill and they want a bill. we constantly in touch with them. i've talked already to the secretary of the treasury. we talk almost every day as i do the white house. the chief of staff calls, what's the status? where are we? they have a great interest in moving forward on a bill and
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other matters, obviously, that are on the table and involved that one, as well. but again, i come back do you. the real problem is the face and 101st senator that i don't know howard baker that coined that phrase or bob dole or george mitchell but the 101st senator is something to appreciate in an election year. that 101st senator can play havoc with trying to get something done. yes? i'm sorry? [ inaudible ] i hope not. because i fully acknowledge and recognize they always think the best products, my years here, every major bill i've been involved in involved having a partner. going back to the days of child
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care legislation with orrin hatch. family and medical leave with kit bond and not exception to think of that i was able to move anything without that relationship. and i think that's true here, as well. a bill of this complexity, i mentioned the four major pieces of this bill but the major pieces require cooperation. it doesn't happen. i'm not sure you get as good a product without that, eat herb. it's not just a political factor but a substantive evaluation, as well. i fully recognize if i don't get that it's hard tore get a bill done given the time constraints and relationship with bob corker, with dick shelby, judd gregg and mark warner, sherrod brown. i talk to them all the time and this bill, this proposal on monday will reflect a lot of what those conversations produced. >> senator dodd coming out the address reporters on the status of his efforts to move financial
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regulatory reform through the snooth, the efforts, fuss traditions, obviously. any substantial new there is? the fact to get something on monday, is that newsworthy? >> no. it's what we've been expecting all morning. i think you had senator dodd feeling the need to count ear little bit some of the statements that senator corker made about how health care and the democratic drive to pass health care bill has taken this down what dodd said, no, that wasn't it. i'm aware of that but it's really about the clock. they have a very fie in it number of days in an election year to get stuff done. the white house is impatient. the democratic base is impatient. didn't want it to be an endless stall as they perceive on health care and see the republican leadership as having hemmed in bob corker making it more difficult, created new issues that solve one issue and more issues come up. >> okay. >> made it more difficult to get
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to yes. >> john? >> as we said earlier, blaming it on health care. >> john, seemed like two different versions of reality there. one corker's and one of dodds. >> kind of like republicans and democrats. >> corker saying he was confused as to why they did this. just one issue noticing, corker said we had figured out consume herb protection. dodd said, we didn't. so, it is a little unclear who's telling the truth here. >> look. if they figured it out, they would have a compromise bill. corker said every single issue resolved at the -- every single issue that came up we resolved. we would have a compromise bill. they weren't there and dodd simply couldn't decide to wait any longer. >> do we know whether the proposals will be in the dodd bill from the corker side saying, hey, you are not at the table but took some of your stuff? >> absolutely they will.
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>> yeah. >> this consumer protection agency, dispute over the rule making and length of enforcement as bob corker referred to this morning but it is -- we believe that dodd will lay out bill that house that is in the federal reserve. that was bob corker's idea. >> there's the music, guys. thank you. stick around. we'll have a debate on carlos slim and now they're trying to ban salt in restaurants.
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145 years of financial stability and still no one knows the sun life financial name. that changes today. i hear you're the clown in charge. so, cirque du soleil becomes... ...cirque du sun life.
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because soleil means sun.... (gibberish) i'll take that as a yes... sooner or later, you'll know our name. sun life financial.
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it is all about titles and technology this year with special emphasis on new controls that really get you in the game.
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and not just your head. your entire body. jim goldman joins us live from the show. jim in. >> reporter: dennis, good afternoon to you. it was sony making big news last night. get ready for the sony move. that's the name that the company is giving to its new sony motion controlled remote and this is the device that will start to run your playstation 3. the move, it will be available later this year with a controller, a camera, some additional accessories. it gives sony a powerful new way to take on nintendo and its wii. nintendo selling 9 million consoles last year. nearly 4 million in december alone. sony, it wants a bigger piece of the action and if you think it looks like the wii controllers, that's not a mistake. >> the wii generation is more of a casual gaming experience and something that hasn't really tapped into the core. we like to feel like we can play everywhere.
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we're interested in the casual and young gamer, the core and people that have never played games before and we feel we can compete in those different arenas and playstation and our move is a testament to just that. >> reporter: and it's not just about sony versus nintendo either but sony versus microsoft. xbox will see microsoft's own motion control technology in project natal coming out this year. the whole industry moving in this generation with publishers trying to publish new titles for the new innovation and that's the word here, new innovation. this industry can use a real shot in the arm and many publishers and game console makers alike are hoping innovation leads to new sales, as well. back to you. >> stay with us. let's bring in c-net's jeff bakalar in new york. jeff, welcome back. hey, this new sony thing, is it just a wii rip-off or something new and breakthrough here?
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>> sony definitely is doing a good job at sort of incorpora incorporating what microsoft is doing and what nintendo has already been able to do and sort of doing a hybrid camera technology plus the motion sensing and they're sort of combination of those two technologies is what we have with playstation move. >> the playstation 3 is probably one of the best technologies, most disappointing in terms of living up with the promise. we have a koefr story and thought it was 100 million households. it is a big disappointment. will this make any difference in that? >> 2010 is a good year for playstation 3. i think they're definitely showing the guns right now with this gdc announcement. microsoft is very secretive about what natal's going to look like. sony and gdc showed you prixs, where sony playstation move is going to move with. i don't want to say that sony is in the gutter right now.
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i think they have had a good end of '09 and looks like they have a positive 2010, as well, with move. >> sony poised to pounce. will they cut prices or snog get me in their stores? >> you know, i don't think they're going cut prices anymore than they have already. you just heard sony had a very good december. a very good first part of 2010. this is a company that makes no bones about the fact that the playstation 3 adoption is slow to take off and slow to do the price cuts but when you couple in bluray and now couple in this sort of wii experience with the kinds of extensive gaming library that sony has that targets the core, this becomes a very interesting time for this company. it really seems to be hitting its stride as we head into this year and xbox and tals wii may be playing catch up to sony for 2010. >> i'm hoping the same thing two or three christmases in a row. what should we look for new
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games approaches in the next year? >> something really interesting announced last year is a presence of gdc 2010 this year is on live which is a basically an approach at streaming video games over the internet allowing you to basically control a video game remotely and just have video streamed to you locally and putting all of that heave vi computing over the internet. it is a subscription-based service. 15 bucks a month to rent game sos that's definitely something to look out for, especially with microsoft, sony and nintendo relying heavily on internet-based down loadible games. >> just a quick -- >> yeah? >> all right. i was just going to say really quickly on on live, doesn't matter console you have or platform. this is potentially a significant game changer. it doesn't matter what system you have at home. if you have a computer or a tv, you're good to go. >> good to go.
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thank you. stralight ahead, he's numbe one in the "forbes" list. some say he's monopolist. which is it? national car rental knows i'm picky. so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro. hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao!
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[ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco.
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"forbes" magazine is out with the richest list. richest man in the world, carlos slim helu. he edges out bill gates bay half a billion. but is slim a hero of capitalism or a monopolist with no regard
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for the mexican poor? george grayson is author of "mexico." stephanie mento interviewed mr. slim. mr. grayson, i'll start with you. you coined a phrase people use, slim-landia and reference to the fact he has so many businesses in mexico that you can wake up in the morning, use the phone, go to get coffee, put on clothes, do all shopping in businesses that he controls. you have a problem with, that i guess. >> no. that's exactly right. my problem is that the mexican sxhi like the human body and its arteries are clogged and clogged because there's so many monopolies and oligopolies that just strangle the system and the result is mexico limps along at a very slow rate, and it's happening its breakfast and lunch eaten by the chinese and
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the asian tigers because of the inefficiencies. one of the major is telecommunications on which mr. slim has a monopoly. >> stephanie, what do you say to that? we know he is writing a lot of facts but if you're carlos slim, you're playing by the rule it is government gave you. >> sure. i think there is a couple of things. i'm amused by the casting of hero or villain because there's a lot of guys on who are really bad dudes. keep this in a little bit of perspective. carlos slim is not somebody who is as you say, michelle, i mean, he is playing by the rules dealt. like any good businessman, he is probably influencing those rules and probably learned from the best. not forget who some of the initial investors were. you know, the telecommunications industry has a long history of influencing the rule making. >> looking at the gap that carlos slim has compared to all
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the other mexicans who were also given basically monopolies back in the early '90s, the gap between the rest of them which is they're worth $2 billion, $3 billion, $4 billion, a lot of people say that's pure business acumen to get you to that position sni thi position. >> since then, though, it's been using the political contacts, especially with former president carlos salanis to be able to buy telmax and a whole coderieo lobbyists and politicians. it is said in mexico that the politicians who are not bought or rented. and it's the crony capitalists like carlos slim who have the strangle hold on mexico's
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economy. >> stephanie, the last word. >> i would argue that there's definitely crony capitalism but he is a good businessman seeing that the nci bonds were going to be worth a lot of money. he's made money on sachs fifth avenue and that's not because he was fed a tip but saw a business opportunity and i would argue he's smart guy as well as somebody who knows how to work his own home country system. >> thank you for joining us. >> thank you. >> thanks. so get this. new york state is looking to ban the use of salt in restaurant cooking. a lot of chefs are just really furious about this. and frankly, so am i. >> doctors say too much salt leads to all kinds of health problems and costs even though it tastes good and that's a public issue. is this the government's business or not?
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first, it was the smoking ban in public places. there's a crackdown on trans fafat s and soda. now new york state wants to ban the salt. they have a nanny state to save lives or government keeping out of the kich snn michael ferrari
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of soho area and dr. eric braverman, author of "younger, thinner you diet." let's start with chef michael. so the government wants to cut down on health care costs and get you to stop using salt. what is the big deal? >> well, you know, salt is such an essential part of cooking. it is one of the ingredients that it just cooking is not the same without. and you know, when i first heard this i laughed about it. that's taking paint from an artist. people choose, you know, they should have a right to choose when they have salt and when you come into a restaurant, you are paying for the skill of the chef to season the food for you. >> and the bill would fine you a thousand dollars for each usage of salt r. you willing to give up the salt at that cost? >> you know what? no. i'll be one of these people to fight for my career and fight for my passion for food to be able to provide the food that people want and love in my
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restaurant. >> dr. blairaverman, french fri delivery systems for salt, sir. we need salt to live. where is your humanity? >> it's called heart disease, stroke, obesity and an epidemic of completely unfit, unhealthy american that is are salt addicted and really using it as an anti-depressants. let's learn to cook with spices and herbs and feed our brain properly. it is a great idea, makes us healthier. we are footing the bill for individuals with high blood pressure and salt. >> it would allow salt shakers on the tables. let's just make it illegal everywhere. >> it is not simple that it's all bad. >> and other things, also. >> always a role for salt. no one's suffering without nicotine inside the bars right now. we go to restaurants all the time and people forgot how to cook. >> people are paying -- >> they just load the meals --
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>> michael, the chef? >> people are paying because they choose to have seasoned food cooked properly. salt is an essential ingredient. wlaunlg? i don't really think that you understand what food would be like without salt. no life, bland. so you know what? >> another proposal for you, dr. braverman. what if the city decides lipitor, made the world safe for cheeseburgerers? we want to stop you from prescribing lipitor to people like me. >> government's paying the medical bills and can tell us how to live. >> never tells a doctor what to prescribe the drug for all the time. >> they do. they actually manipulate -- >> we have a beautiful country with choices and if you choose to regulate sodium in your diet, you can choose that. or if people who love flavorful food, they choose that. >> but dennis, do you hear what the doctor's saying? well, we are paying for it so we
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have the right to tell people how to live their lives. that's the problem. when everybody's paying for everybody else in their health care, everybody thinks they can tell everybody else how to live their lives. this's the downside of when they talk about expanding health care reform. >> doctor, what do you say to that? >> we all -- >> doctor? >> learn to cook with spices and herbs. >> you didn't answer my question. >> which we do. we do. >> all right. gentlemen, you know what? i think we will wrap it here. i appreciate you both being here. love the chef's whites. glad you wore them. that's all for the day today. steve, do you like snalt. >> i do. i don't think the government should be banning it.
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